China's Xiaomi submits HK filing, with big IPO expected

Xiaomi Corp. smartphones are displayed at a company store in Handan Hebei province on March 28

Xiaomi Corp. smartphones are displayed at a company store in Handan Hebei province on March 28

Chinese smartphone maker Xiaomi has officially filed for an initial public offering (IPO) in Hong Kong that aims to raise $10 billion in a sale that may value the company at $100 billion.

Meanwhile, Xiaomi's founder Lei Jun had said that he intends to distribute the profits from its hardware business amongst Xiaomi's users. Operating profit grew from RMB 3.79 billion to RMB 12.22 billion in the same period, whereas net profits fell from RMB 491.6 million to a net loss of RMB 43.89 billion a year ago. The company said by March 2018, it has 190 million users based on Android platform. Xiaomi's decision, four years after Alibaba Group Holding Ltd. chose NY, signals a new phase for the city's ambitions to rival the US market.

The announcement came as the company posted revenue of CNY 114.62 billion ($18 billion) in 2017, up 67.5 percent against 2016.

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The company is now at the fourth position in the smartphone market globally, behind Samsung, Apple and Huawei. Two Chinese biotech companies said they would switch their New York IPOs to Hong Kong to raise US$800 million, Reuters reported last week. It has enjoyed particularly strong growth in India, where it has overtaken Samsung as the biggest selling smartphone maker. Operating profit tripled to 12.2 billion yuan, driven mainly by internet services with 60.2 per cent in gross margins. It is also making a big push outside China's borders, with 28 percent of its sales derived from overseas markets past year, up from 6.1 per cent in 2015. To reach more customers, Xiaomi went physical: it now operates more than 500 brick and mortar retail stores, mostly in China and India.

Under Lei, Xiaomi is looking to enter developed markets for smartphones as it consolidates its position in emerging markets. The company remains in fourth place in its home market, where Xiaomi generated 58 percent of phone sales in 2017, according to Canalys. Still, it's a rare case of a Chinese corporation trying to forge an global brand.

Founded in 2010, Xiaomi first shot to prominence in China thanks to its tactic of selling nearly all of its phones online at razor-thin profit margins. "Xiaomi has more exposure to global expansion opportunities right now".

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